Lifelabs: Improved efficiencies and enhanced business processes with IBM and Oracle

Finding an ERP system suitable for immediate needs and long-term growth

LifeLabs provides testing services that help healthcare providers in the treatment of disease and illnesses. Each year, the Canadian company conducts more than 50 million labora­tory tests on over 10 million patients. When LifeLab’s parent company decided to sell its medical labs in Canada, one of the requirements associated with the sale was a swift implementation of a new ERP system for LifeLabs.

As a standalone entity, LifeLabs needed to fine tune business pro­cesses in order to operate more efficiently. For example, it sought tighter control of procurement by moving from an annual inventory process to a perpetual inventory. In the past, each lab had received shipments directly from suppliers.

The company wanted to distribute supplies from a centralized ware­house to each individual facility. This would help it gain a better view into its supply chain by tracking actual availability of goods and more closely determining the correct time to reorder from suppliers. Additionally, LifeLabs wanted to institute an elec­tronic data interchange system to reduce data entry time and drive effi­ciencies in purchasing and accounts payable functions.

Quick implementation enables a smooth transition
IBM Global Business Services had previously played an integral role when LifeLab’s former parent company addressed the disparate platforms and processes its five subsidiaries were running. It had chosen to consolidate on the Oracle E-Business Suite and IBM implemented that system. Because of this existing relationship and trust that IBM could deliver in a very aggressive time frame, LifeLabs selected IBM.

“When LifeLabs had to disengage from all corporate support services, including IT, we had to figure out a way to quickly rebuild all those capabilities. That meant we had to completely reform an IT department and build an infrastructure,” explains Maurizio Laudisa, CIO, LifeLabs.

LifeLabs chose IBM Global Business Services to install and manage the Oracle e-Business Suite. Laudisa cited positive previous history, and the extensive experience of IBM consultants in implementing and maintaining Oracle applications, as reasons for that choice.

In anticipation of an upcoming sale, LifeLabs had only five months to build the systems it needed. IBM leveraged the legacy data and converted it for use in the new sys­tem. The IBM consultants had the ERP up and running all the necessary processes within this compressed timeframe. “When the final sale date was announced, IBM helped us com­pletely convert our systems when we were notified that we only had ten days before our company was sold,” explains April Gamache, vice president Business Services, general manager Quebec, LifeLabs.

Streamlining business processes after the big move
LifeLabs initially set out to replicate the environment that it had been running as a subsidiary company. However, it quickly realized it would be more advantageous to tailor thesystem to the requirements of a smaller, leaner company. For exam­ple, certain Oracle modules better fit the general needs of a larger company, and as a standalone entity LifeLabs could now reduce complexi­ties inherent in the ERP system.

This improvement was kick started when a working group of key LifeLabs personnel and IBM con­sultants assessed the company’s current business processes. They worked together using the principles of Lean Six Sigma, a management philosophy that focuses on driving operational efficiencies and maxi­mizing shareholder value. The team quickly discovered areas in which the company could improve operations. Specifically, the company optimized supply chain and billing activities through modification and better utilization of the Oracle applications, such as linking the ERP more closely to back-office functions. “By run-ning a more efficient IT organization, we’ve been able to lessen total cost of ownership of the ERP system by 30 percent,” reports Laudisa.

The IBM project team reconfigured Oracle modules to allow LifeLabs to conduct perpetual inventory. Essentially, this means that the com­pany can completely assess avail­ability and location of all necessary supplies. LifeLabs can then release these supplies to individual labs on an as-needed basis. As a result, the company is able to more tightly control inventory and reduce unnec­essary procurement costs.

With IBM’s assistance, LifeLabs launched an electronic data inter­change (EDI) system in the areas of accounts payable and purchasing. The system, fully integrated with back-office finance functions, enables LifeLabs to receive accounts pay­able invoices and advanced ship­ping notices electronically. Similarly, the company can transmit purchase orders in the same efficient manner, greatly reducing data entry time.

LifeLabs and IBM partnered on all aspects of the new processes. IBM consultants’ understanding of Oracle applications allowed them to help LifeLabs mine the capabili-ties of the new system. “When we looked at certain processes, the IBM team was able to point out exist­ing functionality in an Oracle module that would enable us to do what we wanted,” says Gamache. “They were able to help us to use our ERP more effectively and efficiently.”

Planning for future enhancements
Proactively looking to the future, LifeLabs has established a steering committee to identify opportunities to further leverage Oracle functional­ity and tighten business processes. When LifeLabs looks into new areas for performance enhancement and process redesign, the company first assesses current capabilities and then envisions future improvements.

“At that point, we typically engage IBM to help us define the new business process, and collaborate on a roadmap for implementation,” notes Gamache.

LifeLabs continues to seek efficien­cies within the infrastructure it has in place, and IBM is there to help. “The team we had from IBM wasn’t just installing software; they knew that they were delivering solutions to business problems. They took the time to really look at the business, and partnered with us as if they were part of our company,” says Gamache. “That’s why we kept going back to IBM, and will continue to work with IBM in the future.”